LESSON 5-1

LESSON 5-1Checking AccountsLESSON 5-19/30/14GREEN1Checking AccountIn accounting, money is usually referred to as cash.

Most businesses make major cash payments by cash. However, small cash payments for items such as postage and some supplies may be made from a cash fund kept at the place of business.

Because cash transactions occur more frequently than other types of transactions, more chances occur to make recording errors affecting cash.

A business form ordering a bank to pay cash from a bank account is known as a check. A bank account from which payments can be ordered by a depositor is called a checking account.

DEPOSITING CASHLESSON 5-13

page 119DEPOSIT RECORDED ON A CHECK STUBLESSON 5-14

page 119EndorsementsEndorsement-a signature or stamp on the back of a check transferring ownership Three types of Endorsements:Blank-an endorsement consisting only of the endorsers signature Special (endorsements in full)-An endorsement indicating a new owner of a check is called Pay to the order ofRestrictive-an endorsement restricting further transfer of a checks ownership-stamps automatically being placed on check

ENDORSEMENTSLESSON 5-16page 120

Blank Endorsement

Special Endorsement

Restrictive EndorsementCOMPLETED CHECK STUBLESSON 5-175.Write the amount of the check.2.Write the date of the check.3.Write to whom the check is to be paid.4.Record the purpose of the check.1.Write the amount of the check.6.Calculate the new checking account balance.

page 121123456COMPLETED CHECKLESSON 5-187.Write the date.

page 12111121098710.Write the amount in words.8.Write to whom the check is to be paid.9.Write the amount in figures.11.Write the purpose of the check.12.Sign the check.RECORDING A VOIDED CHECKLESSON 5-19

1.Record the date in the Date column.2.Write the word VOID in the Account Title column3.Write the check number in the Doc. No. column.4.Place a check mark in the Post. Ref. column.5.Place a dash in both the Debit and Credit columns.page 12212345LESSON 5-19/30/14GREEN9TERMS REVIEWcode of conductchecking accountendorsementblank endorsementspecial endorsementrestrictive endorsementpostdated checkLESSON 5-110page 123LESSON 5-2Bank ReconciliationLESSON 5-29/30/14GREEN11Bank StatementA report of deposits, withdrawals, and bank balances sent to a depositor by a bank is called a bank statement.

BANK STATEMENTLESSON 5-213

page 124BANK STATEMENT RECONCILIATIONLESSON 5-214

5.Bank Statement Balance1234567899.Adjusted Bank Balancepage 1252.Check Stub Balance10.Compare Adjusted Balances1.Date3.Service Charge4.Adjusted Check Stub Balance6.Outstanding Deposits7.Subtotal8.Outstanding Checks10RECORDING A BANK SERVICE CHARGE ON A CHECK STUBLESSON 5-2151.Write Service Charge $8.00 on the check stub under the heading Other.

page 1261232.Write the amount of the service charge in the amount column.3.Calculate and record the new subtotal on the Subtotal line.JOURNALIZING A BANK SERVICE CHARGELESSON 5-216

1.Write the date.page 12714August 31. Received bank statement showing August bank service charge, $8.00. Memorandum No. 3.2.Write the title of the account debited. Record the debit amount. 3.Write the title of the account credited. Record the credit amount.4.Write the source document number in the Doc. No. column.23TERM REVIEWbank statementLESSON 5-217page 128LESSON 5-3Dishonored Checks and Electronic BankingLESSON 5-39/30/14GREEN18Dishonored CheckA check that a bank refuses to pay is called a dishonored check. Banks dishonor a check when the account of the person who wrote the check has insufficient funds to pay the check.

Banks may dishonor a check for the following reasons:The check appears to be alteredThe signature of the person who signed the check does not match the one on the signature card at the bankThe amounts written in figures and in words do not agreeThe check is postdatedThe person who wrote the check has stopped payment on the check

RECORDING A DISHONORED CHECK ON A CHECK STUBLESSON 5-3201.Write Dishonored check $105.00 on the line under the heading Other.

page 1291232.Write the total of the dishonored check in the amount column.3.Calculate and record the new subtotal on the Subtotal line.JOURNALIZING A DISHONORED CHECKLESSON 5-321

page 13014November 29. Received notice from the bank of a dishonored check from Campus Internet Caf, $70.00, plus $35.00 fee; total, $105.00. Memorandum No. 55.2. Write the title of the account debited. Write the debit amount.3.Write the title of the account credited. Write the amount credited.4. Write the source document number in the Doc. No. column.231. Write the date.Electronic Funds TransferA computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents is called electronic funds transfer.

JOURNALIZING AN ELECTRONIC FUNDS TRANSFERLESSON 5-323

page 131September 2. Paid cash on account to Kelson Enterprises, $350.00, using EFT. Memorandum No. 10.2.Write the title of the account debited. Record the amount debited.3.Write the title of the account credited. Record the amount credited.4. Write the source document number in the Doc. No. column.14231. Write the date.Debit CardA bank card the automatically deducts the amount of a purchase from the checking account of the cardholder is called debit card.

JOURNALIZING A DEBIT CARD TRANSACTIONLESSON 5-325

page 132September 5. Purchased supplies, $24.00, using debit card. Memorandum No. 12.2.Write the title of the account debited. Record the amount debited.3.Write the title of the account credited. Record the amount credited. 4.Write the source document number in the Doc. No. column.14231. Write the date.TERMS REVIEWdishonored checkelectronic funds transferdebit cardLESSON 5-326page 133LESSON 5-4Petty CashLESSON 5-49/30/14GREEN27PETTY CASHAn amount of cash kept on hand and used for making small payments is called petty cash.

ESTABLISHING A PETTY CASH FUNDLESSON 5-429

1.Write the date.page 134August 19. Paid cash to establish a petty cash fund, $100.00. Check No. 8.2.Write the title of the account debited. Record the amount debited.3.Write the title of the account credited. Record the amount credited.4.Write the source document number in the Doc. No. column.1423

MAKING PAYMENTS FROM A PETTY CASH FUND WITH A PETTY CASH SLIPLESSON 5-430page 135A form showing proof of a petty cash payment is called a petty cash slip. REPLENISHING PETTY CASHLESSON 5-4311.Write the date.

page 13614August 31. Paid cash to replenish the petty cash fund, $30.00: miscellaneous expense, $20.00; advertising, $10.00. Check No. 12.4.Write the source document number in the Doc. No. column.3.Write the title of the account credited. Record the credit amount.2.Write the title of the first account debited. Write the debit amount. Write the title of the second account. Record the debit amount.23TERMS REVIEWpetty cashpetty cash slipLESSON 5-432page 138